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New Delhi , Dec. 3

HSBC has said that its open offer to UTI Bank shareholders would commence from Thursday.

Despite the upward swing in UTI Bank's share price during the day on the news of the stake sale, HSBC said that it had no plans to alter the offer price of Rs 90 per share in the open offer.

UTI Bank shares rose 19.98 per cent on the BSE to touch Rs 114.10 while it ended 20.04 per cent higher on NSE at Rs 115.

With this, the open offer is expected to remain a mere formality, with HSBC itself convinced that not many shareholders would be willing to surrender their shares at the offer price.

"The public float in UTI Bank is barely 16 per cent. The likelihood of picking up a large block of shares is fairly small. There are no plans to change the offer price at this particular time," Mr Niall S.K. Booker, Chief Executive Officer, HSBC India, said at a press conference today.

HSBC, however, maintained that the transaction with CDC was a "pure financial investment" and that it did not plan to exercise management control in UTI Bank.

"Both in India and China, we have made minority stake investments. HSBC is not averse to increasing its stake if the foreign direct investment limits are revised," said Mr Michael R.P. Smith, CEO (Designate), HSBC Asia Pacific. Currently the regulations permit 49 per cent FDI in the banking sector.

The acquisition does not entitle HSBC to exercise certain rights enjoyed by CDC such as a say in the senior appointments in the bank. "It was difficult to negotiate transfer of rights with CDC. We will now have to negotiate it with the other shareholders," Mr Booker said.

Regarding representations on the board of the bank, Mr Booker said that HSBC would be inclined to accept such an offer. "We do not want to be treated any different from other shareholders regarding board positions," he said.

Asked whether HSBC had talks with UTI on acquiring the latter's stake in UTI Bank, Mr Smith disclosed that the Chairman of UTI, Mr M. Damodaran, and the Chairman and Managing Director of UTI Bank, Dr P.J. Nayak, were taken into confidence about the deal after it was signed. "We have negotiated only with the vendor, and not met with any other party to avoid accusations of side deals," Mr Smith said.

Mr Smith said that for the time being the UTI Bank deal would not lead to any change in the operations of the Indian branches of HSBC.

The bank is keen on foraying into other financial services as well. "We have no shopping list. But we are looking at the insurance sector as well and could either look at acquisitions or set up our own operations," said Mr Smith.

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